Verizon Communications (VZ)

Transaction Details, Tax-Free Distribution

The acquired operations will be spun off in a new entity, which will be immediately merged into Frontier. Verizon shareholders will receive approximately $5.3 billion of Frontier common stock in the merger, subject to a collar mechanism and certain other possible closing adjustments provided for in the merger agreement. Verizon will receive approximately $3.3 billion in value through a combination of cash distributions to Verizon, debt securities issued to Verizon prior to the spinoff and assumption of certain debt previously issued by Verizon’s telephone company subsidiaries. Verizon may exchange the newly issued debt securities for certain debt that was previously issued by Verizon, which would reduce the amount of outstanding debt on Verizon’s balance sheet.

Based on the midpoint of the collar, and assuming no closing adjustments, Verizon shareholders will own approximately 68 percent of the new company, and Frontier shareholders will own approximately 32 percent, with Verizon shareholders receiving one share of Frontier stock for approximately every 4.2 shares of Verizon stock held as of the record date. The exact distribution ratio will be determined based on the number of shares of Verizon common stock outstanding on the record date for the spinoff and the average price of Frontier common stock (subject to the collar mechanism) for a 30-day measurement period ending shortly before the closing of the merger.

The collar provides that the number of Frontier shares delivered to Verizon shareholders will vary to compensate for changes in the price of Frontier shares (i.e. to assure delivery of a fixed aggregate value) to the extent the 30-day average Frontier share price described above varies between $7.00 and $8.50.

Verizon News Release, Page 6

Both the spinoff and merger are expected to qualify as tax-free transactions, except to the extent that cash is paid to Verizon shareholders in lieu of fractional shares. Verizon Communications will not own any shares in Frontier after the merger.

Barclays Capital Inc. and JP Morgan Securities Inc. advised Verizon in the transaction.